Business confidence in Wales fell 15 points during November to 30%, according to the latest Business Barometer from Lloyds Bank Commercial Banking – conducted between 1st-15th November, before the Chancellor’s Autumn Statement announcement on Wednesday 22nd November.
Companies in Wales reported lower confidence in their own business prospects month-on-month, down 13 points at 35%. When taken alongside their optimism in the economy, down 19 points to 24%, this gives a headline confidence reading of 30%.
Wales businesses identified their top target areas for growth in the next six months as evolving their offer 39%, investing in sustainability 39% and hiring new employees 33%.
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 32% of businesses in the region expect to increase staff levels over the next year, down 13 points on last month.
National picture
Overall UK business confidence rose three points in November from 39% to 42%, the third consecutive monthly increase, while firms’ outlook on the overall UK economy increased four points to 38%. Businesses’ optimism in their own trading prospects also continued the upward trend for the second consecutive month, rising three points to 48%.
Companies’ hiring intentions reached their highest level since May 2022, with 35% of firms intending to increase staff levels over the next 12 months, up three points month-on-month.
Firms in London reported the highest level of business confidence, jumping nine points to 56% followed by the North West (54%), Yorkshire and the Humber (50%) and the North East (48%). Companies in the North West reported the biggest uptick in business confidence, increasing 20 points month-on-month to 54%.
Firms in the services industry reported an increase in confidence to 46% (up three points), the highest level for over two years (since September 2021), reflecting broad-based optimism in the sector. Retail confidence also rose for a second month to 42% (up five points), while sentiment among manufacturing firms reached a five-month high of 45% (up nine points) in contrast with recent shortfalls. Construction firms’ confidence improved for the first time in three months to 35% (up four points), but this still lags other sectors.
Sam Noble, regional director for Wales at Lloyds Bank Commercial Banking, said:
“Business confidence has taken a hit this month, but firms are still upbeat about their trading prospects, and many are planning on increasing headcount in the year ahead.
“We’re heading into what is often the busiest time of year for many firms, particularly those in the country’s world-famous hospitality and leisure industry, and we’re hearing from many that they’re excited to embrace new opportunities in the new year.
“We’ll continue to be by the side of businesses in Wales, and support is always available to them as they continue to seek growth”.
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said:
“Business confidence rising to a 21-month high shows the resilience of UK companies, as both trading prospects and economic optimism continue to rise.
“It’s encouraging to see signs that wage expectations may be stabilising, even against the backdrop of hiring intentions increasing to an 18-month high. Price indicators in the survey are similarly up, with our data continuing to show that firms are still safeguarding their profit margins in response to past rises in interest rates, wage increase pressures, and the prospect of higher energy prices again this winter.
“Our next survey in December will reveal how firms are digesting the measures announced in the Chancellor’s Autumn Statement last week as they navigate the busy festive season and make plans for 2024.”
